There were some positive trends emerging from the June 2020 trade data. It had some clear reasons for celebration as the weak imports during COVID-19 led to a sharp increase in the trade surplus for June 2020 after a marginal overall trade surplus in May. The merchandise trade surplus of $0.79 billion in Jun-20 is the first instance in the last 18 years.

Merchandise deficit refers to the deficit arising from physical goods trade. The merchandise deficit was at a level of $3.15 billion May 2020 but in June the goods trade became a surplus for the first time since 2002. India’s exports fell by 12.4% but imports fell by a whopping 47.6% and that led to a trade surplus of $0.79 billion on the merchandise account.

Oil and gold imports were sharply down and that also contributed. On the exports front, iron ore exports saw a sharp spike in June along with other items like export of oil seeds as well as the export of organic and inorganic chemicals. The overall surplus including services has gone up sharply and that is also likely to be positive for the current account.